So by law we are always allowed to pay off a loan at any time but the slimey bastards can penalize you for doing so?

That is real nice

Think about it. The bank is loaning you the money because they want to make money (interest) off of you. If you pay it off early.....they penalize you because they aren't going to make that money. A lot of banks don't do it anymore.....but there are some that still do.